The Problem with Economists

As has bothered some of you, I think the field of Economics is largely intellectually bankrupt, a field specializing in mathematical formulas that tell us almost nothing about human behavior, a field serving as intellectual hacks for free-market global capitalism that provides justification for the exploitation of the world’s workers without actually caring about those workers, a field that intellectually uncurious and that is only comfortable with policymaking from 30,000 feet, yet a field that has an enormously inflated view of its own importance to the world, often looking down on other academic disciplines. This is not true of all economists of course, but it is true of far too many.

After reading through a policy speech prepared by John Kenneth Galbraith, President Lyndon Johnson addressed the economist. “You know, Ken,” he said, “the trouble with economics is it’s like peeing in your pants. It feels hot to you but leaves everyone else cold.” One only has to go to an economics seminar to know that Johnson was right.

Yet in an era in which markets have become the method of justifying and adjudicating all things, we cannot afford to have economics leaving us feeling cold and wet. Economics has become the benchmark for other intellectual endeavors; its practitioners rule policy debates; and, sadly, its mathematical modeling has become a closet form of anti-intellectualism — mathematically abstracted, as it tends to be, from real-world problems — that is creeping into other disciplines. While fewer people care that much of the lit-crit crowd stopped talking humanities to humans, economics is too central to political life for such shenanigans. It is time for the “queen of the social sciences” to get off her throne and start speaking to some of the lesser subjects in the kingdom of academe.

My “J’accuse” is this: The field of economics practices the very sin it preaches against ­— protectionism. That is to say, economists are protectionists of the intellectual sort at a time when the need for trade in the market of ideas has never been more pressing.

In a recent article, “The Superiority of Economists,” in the Journal of Economic Perspectives, we learn a number of things that are truly impressive about the field: Its graduates have higher standardized-test scores than political scientists and sociologists; they tend to find places higher up in policy and advisory circles; they are the best at math; and they earn more money and tend to have better career prospects than other graduates do. It’s no surprise that economists also seem to have more intellectual self-confidence than those in other fields. Economics, after all, is the only social science to have its own Nobel prize. Grounded in the present, they look toward the future and only rarely to the past.

On the other hand, smug in their security, economists are the least likely to cite other disciplines. Perhaps the most disturbing thing is the remarkable extent to which graduate training in the field is similar across institutions and departments — a stark contrast to other disciplines. And most of that graduate education is driven by textbooks and textbooks alone. To other social scientists and humanists, that is an astonishing proposition, and evidence of the field’s range of ideas.

As that survey of economic training shows, economics demonstrates more internal control over its own labor market, hiring only those who follow the prescribed formulas. The study of economics appears to be an exercise in the affirmation of orthodoxy.

First, that is classic LBJ. God bless him. Second, as Cowie points out, the Nobel in economics is a ridiculous joke that only exists because the Bank of Sweden wanted to promote itself.

The insularity of economics prompts an enormous irony: Rather than a market, economics borders on a command economy. From inside its fenced-in monocultural landscape, students are taught that they have arrived at the land of objectivity, that they have passed beyond the ideological and into the scientific. Not only is this protectionism, but it creates a rub with democratic theory and practice. It is, essentially, an invitation to opt out of the greater intellectual struggles in which the rest of us are engaged. By protecting itself from the contagion of outside ideas, economics offers up a more extreme version of the Balkanization and creeping anti-­intellectualism that are apparent elsewhere in the academy. Its hegemonic role, however, makes all the more important the need for the field to open up and transcend its preoccupation with the blackboard fictions of economic modeling.

As the Keynes scholar Robert Skidelsky has put it, the methodological presumption of economics is that “a good car [called economic modeling] has been built: Students must learn how to drive it.” But economics should not be a course in driver’s ed; it should empower students to think critically and creatively about the whole system of transportation. We should be inculcating curiosity, a sense of adventure, a greater range of ideas, not shutting them down. After all, it’s not as if economists are simply correct. When the queen asked the faculty members of the London School of Economics and Political Science why they did not foresee the 2008 financial crisis, they said they would get back to her. They later admitted in a letter that they had no answer and that their promise to provide one was an example of “wishful thinking combined with hubris.”

…

To put it bluntly, the discipline of economics has yet to get over its childish passion for mathematics and for purely theoretical and often highly ideological speculation, at the expense of historical research and collaboration with the other social sciences. Economists are all too often preoccupied with petty mathematical problems of interest only to themselves. This obsession with mathematics is an easy way of acquiring the appearance of scientificity without having to answer the far more complex questions posed by the world we live in.

The book is more important, of course, for its argument about how the economy works. Piketty’s basic premise is as heroic as it is succinct: The rate of return on capital outstrips economic growth, making capitalism an engine for inequality unless there are countervailing forces.

As powerful and persuasive as Piketty’s work is, truth be told, he is not much of a historian. As much as I admire his data — and use it myself — the American history in his book, where it exists, is often just wrong in both fact and interpretation. He wields history like a chef with a heavy hand on the salt — it’s there every time you taste the dish but it doesn’t really help things. Balzac keeps popping up in Piketty’s book, but there are no unions, the New Deal is not especially significant, and there is not much labor-market policy at all. Taxation and war seem to be the only levers of change and, by association, the only solution to problems. Social history — the history from below — seems like an unknown land.

Neither Cowie nor myself think the field of Economics is irredeemable. Obviously we need people studying the economic system. But as currently constructed, the field causes more problems than it solves and in doing so, directly contributes to the inequality of the modern world. Economists need to do better. Stopping the fetishization of mathematics is a good place to start. Study real people doing real things. Read the work of people in other disciplines. Come off the mountaintop and understand the people you theorize about. Talk to them. Speak to their concerns.

Cowie by the way is one our leading historians. Capital Moves was foundational in the study of capital mobility as a historical phenomenon and was the book that inspired Out of Sight. Stayin’ Alive may be the most important book written on the decline of working-class America in the 1970s. And his new book on the New Deal anomaly promises to be transformational in how we think about social change and inequality in American history.

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Dang. From the title, was expecting an evisceration of Binyamin Applebaum’s “ask any economist; the draft is a bad idea” piece in the NYT.

Amadan

On the other hand, smug in their security, economists are the least likely to cite other disciplines.

A bit polemical, maybe? Behavioural Economics (flavour-of-the-month, at least among financial regulators on this side of the Pond) is based to a significant extent on the work of psychologists such as Kahneman.

Cowie notes that the rise of this subfield is a step in the right direction.

rjayp

Heterodox econ has a storied history, cf Karl Marx. There are indeed a goodly number of current practitioners and researchers. See the yeoman work on the impact of raising minimum wages (i.e., not the impact predicted by market theory), for just one example.

Ronan

What’s the impact shown by “market theory”? Most mainstream, (neoclassical, if you want) economists researching minimum wage effects on jobs don’t say a min wage increase inevitably reduces jobs. There’s a lot of research by a lot of people utilising a very broad set of methods that give a variety of answers that arent reducible to the sort of caricatures Loomis pushes

djw

Right, my understanding is that there’s a split in the discipline; theorists and ideologues tend to dislike minimum wage increases, but more empirically minded but still relatively mainstream economists don’t think raising the minimum wage from its current level in the US is likely to cause notable employment reductiosns.

Murc

theorists and ideologues tend to dislike minimum wage increases, but more empirically minded but still relatively mainstream economists

Isn’t… isn’t being empirically minded sort of a necessary precondition to being any sort of competent theorist, in any discipline?

Dr. Ronnie James, DO

Google “Brad DeLong John Cochrane” after about 2007 or so.

addicted44

Krugman keeps complaining about how when most economists are faced with reality that doesn’t match their theory, they assume that reality is wrong.

sonamib

Isn’t… isn’t being empirically minded sort of a necessary precondition to being any sort of competent theorist, in any discipline?

One would think so, but check out string theorists. When they found out that their theory only worked with 10 space dimensions, their first reaction was to proclaim that space really has 10 dimensions despite what our lying eyes tell us. Similarly with other wrong predictions.

djw

There are some theoretical investigations that can’t really be done without setting empirics aside for a bit and really diving in. I find it quite a bit easier to buy that this is a plausible path for physics than it is for Economics.

djw

Here is where I think we’re forced to admit that Cowie/Loomis may be on to something.

sibusisodan

Well, yes, but this is something many economists with blogs have also been saying for most of the last decade.

that’s because historically it never has. the reason for this is Econ 101: employment is predicated on demand. if it requires 4 people to do a job, raising the minimum wage isn’t going to reduce the number of people needed to do the job. if a McD’s needs help, the minimum wage isn’t going to stop them from hiring the help they need to meet the demand for their products. lowering the minimum wage will, however, foster a decrease in demand, as their will be less disposable income available to generate it.

again, basic Econ 101.

Malaclypse

And Veblen.

MAJeff

And here I always think of him as one of us sociologists.

Malaclypse

We’re the ones who remember him.

CD

Veblen is well remembered and studied by Institutionalist economists, of whom there are more left than you might realize.

AdamPShort

A step in the right direction, yes, but this is an extraordinarily deep problem. Even the most uncontroversial stories about the history of money turn out to be false when you compare them with anthropological research. Economists often respond to this essentially by scoffing and explaining that these stories are just models to help lay people understand, but in fact the ideas the false stories are being used to illustrate also turn out to be false.

The field is a mess. There is good work being done even by “traditional” economists but they are for the most part out in the wilderness. Randy Wray’s Center for Full Employment and Price Stability is an excellent outfit (and they happen to be deliciously left-wing policitcally, althought their analysis is mostly apolticai) that I highly recommend everyone check out.

Steve LaBonne

[stocking up on popcorn]

Just_Dropping_By

This doesn’t seem like a very fruitful thread for popcorn when the comments are going to be 95%+ people agreeing with the post and trading poorly sourced anecdotes about what terrible human beings economists are and/or cherry picking exotic instances where elementary economic principles appear to not operate as advertised.

I mean, you would totally need to cherry-pick to even find a single poorly-sourced example.

Warren Terra

They meet or exceed expectations and have no major problems in at least 90% of years. If they were major-league baseball players, that would be a phenomenal record!

Malaclypse

Well, maybe, but I don’t follow sportsball.

Hogan

And yet they keep sending me credit card offers. WTF, banks?

ThrottleJockey

Maybe the problem is that you’re looking at “elementary” economics. You know NASA doesn’t rely Physics 101 in deep space all that much either.

At least economists recognize that numbers aren’t imaginary figments of the imagination.

Brett

I think that’s the problem, too. There’s too many people throwing around Econ 101 style stuff, with the simplistic models and so forth. You wouldn’t use that anymore than you’d guide a rocket ship just off of using F=MA.

Hell, even liberals can do this sometimes. I remember Yves Smith’s argument against the basic income over at Naked Capitalism was basically a combination of Econ 101 and “it happened with this 18th century British welfare system for farm laborers”.

AdamPShort

That may be *A* problem, but it’s not the only problem. There’s plenty of complicated graduate-level nonsense flying around to go with the simplistic undergraduate-level variety.

I’ll note that complicated math isn’t a guarantee of goodness. Krugman often points out that simple models have performed rather well during the crises. Of course, you need to have the right model…

Lurker

Guiding a rocket outside the atmosphere is, in fact completely based on Newton’s second law. The tricky part is to get the F correct, and then to solve the equation. That is a task which is not 101 stuff, though the equation is the same.

sonamib

Yeah, and you don’t need Einstein’s general relativity to model gravity, Newton’s gravity works very well.

The trick when you’re using physics is to simplify stuff when you can get away with it! Less hassle, faster calculations, same results within the margin of error.

Karen24

I have had to use economists as expert witnesses. While preparing them for depositions, I have often asked for the sources for their numbers and received a convoluted description of an economic model as an answer. My immediate follow-up question was, “can you point to a specific geographic location and time in history where what you just described actually happened?” And never received a response. Luckily for me, my opponents were relying on economists and received the same sorts of answers. We tried cases using dueling fog machines.

Ronan

All research agendas and all people start from assumptions that are questionable (at best) as descriptions of how the world works, historians as much as any. At least economic models, in their ideal form, put those assumptions in the light so you can judge them on their merits.
Historians could learn something from them, particularly those who claim they aren’t developing general theories (when they are) aren’t working through simplified assumptions and models (when they are) or arent “doing science” (when they’re clearly making very strong statements on causation)

Linnaeus

Historians could learn something from them,

They have, for quite a long time, actually.

Matt McIrvin

Actually, Physics 101 works remarkably well in deep space, though you do have to go a little ways beyond it to get the orbit of Mercury right or use GPS productively.

The problem with other subjects having physics envy is that physics is operating in the one realm where its approach actually works.

Amadan

“Assume a spherical rational actor in an information vaccuum…”

the shadow

ThrottleJockey, I’m not sure that Platonism about mathematical objects is a mark of rationality in the 21st century.

Lee Rudolph

There are several alternatives (with more or fewer adherents among those who actually care about these things; I don’t, actually, care all that much, but I’m somewhat of a fan) besides what TJ denies (that “numbers” are “imaginary figments of the imagination”) and “Platonism about mathematical objects”. For instance, numbers (specifically, positive integers) surely are (in some of their aspects) ‘sociofacts’. Or maybe Lakoff is right (a priori unlikely, I know, but cut him some slack), and numbers are ’embodied metaphors’ with an ontological status akin to Natural Language and its productions. And so on and so forth.

joe from Lowell

Steve LaBonne says:
February 8, 2016 at 6:18 pm
[stocking up on popcorn]

What it really comes down to, Steve, is that social “sciences” aren’t really science.

(Ducks. Also geese and seagulls.)

Matt McIrvin

They are science. They’re not physics, though.

Linnaeus

The science vs. not-science distinction with respect to the social sciences is, to me at least, interesting in that it reveals the cultural authority of science. To call something a science endows it with a status it might not have otherwise.

The way I see it, however, is that if we decided one day that the social sciences weren’t science, but fit into some other category, that would not make them any less worthy as intellectual fields of endeavor.

N__B

To call something a science endows it with a status it might not have otherwise.

Isn’t that one of the reasons that the fundamentalists try to insists that creationism is science, and the young-earth chronology is science, and so on?

You know, I sometimes say this in the sports threads. Statistics, as Ralph Kiner said, are like bikinis. They show you a lot, but they don’t show you everything.

At the same time, I totally understand why people “fetishize” mathematics, and experts generally SHOULD fetishize them. (My problem in sports is with FANS throwing them around like they are general managers or something, when there’s all sorts of things that make a sports performance or performer great that aren’t reflected in statistics and obsessing over stats is a very blinkered way to appreciate sports. But if I were a general manager, of course I would immerse myself in math.)

I play poker. If I didn’t fetishize math, I couldn’t win. It’s really that simple. Math explains real things in the world. It also keeps us disciplined. It keeps us from believing what we’d like to believe. It keeps us from making hasty generalizations.

No, I want economists to fetishize math, because they are making measurements and calculating values and tracking the movement of money. I am sympathetic to Erik’s ideals– indeed, I’m generally sympathetic to socialist economics. But no matter how much we want to believe that our ideologies are correct, everything needs to be measured and sometimes things we would like not to believe are nonetheless true. And math is how you find those things out in many fields, including economics.

Crusty

Erik comes from a field where there is no math and not much in the way of measurement.

Warren Terra

Erik comes from Academic History, and while that doesn’t mandate a focus on numbers it certainly doesn’t preclude it. I’ve certainly bought at least one (mass market) history book because I don’t know much about the subject and it came recommended by having won a major academic-history award, only to find the book unreadable and chock full of tables, with the text full of numbers.

Really? Was this from the 70s or 80s? I would call that extremely unusual, especially in U.S. history.

Warren Terra

The specific book I’m thinking of was something on the Boxer Rebellion, probably published in the 90s based on when I bought it and it being a lightly used or remaindered paperback. I don’t remember what the prize was – my memory says the Fairchild Prize, but a quick Google doesn’t find much.

But I’ve certainly read other books that obsessed on numbers. Hugh Thomas on Cuba springs to mind (mostly in the later chapters).

The social history of the 70s and 80s had a lot of that, but it was out of fashion by the time I started graduate school in 1997. I’ve never known a historian of my generation who uses any form of statistical analysis in their books.

N__B

Read history of technology. It’s still current there.

drwormphd

Also Book History (William St. Clair’s The Reading Nation In the Romanic Period has been pretty influential, although that particular work is more literature than history.)

ThrottleJockey

Why isn’t statistical analysis useful in history? Quantitatively understanding how much forces impact things is at least as important as understanding how forces impact things.

It can be useful. But there are lots of things you can’t measure statistically.

Thom

Of course it can be useful, but first it is not what most historians are interested in or trained to do (economic history is another matter). Second, it has real limitations, and needs to be heavily leavened with other kinds of evidence, especially the testimony of people whose experiences are supposedly measured in this way.

Pseudonym

It can be useful. But there are lots of things you can’t measure statistically.

Really? What percent?

alanba42

Joseph Esherick’s Origins of the Boxer Uprising won the Fairbank prize. It was not however, at all part of the 70’s social history with numbers thing. (Not that there is anything wrong with that.) It was also a really good book.

Lee Rudolph

It was not however, at all part of the 70’s social history with numbers thing.

I have no idea what that “social history with numbers thing” was, but I just checked out the book on Google Books, and it definitely uses multiple regression. From pp. 36–36:

The interesting results begin to appear at the third step in the regression. Here we ask: if we control for administrative level and population, what variable best predicts the number of ju-ren? […] As we can see [in Table 5], the best correlation is to the number of bandits from a given county counted in the Board of Punishment archives.

Definitely sounds like good stuff of its kind, but I’m surprised that its kind isn’t included in “social history with numbers”.

ETA: it’s time for the Coen brothers to make a film of the Boxer Rebellion. I suggest they call it No County for Ji-Ren.

Linnaeus

I have no idea what that “social history with numbers thing”

Short version: In the 1960s and 1970s, social history emerged as a coherent subfield of history with a discernable methodology and grew very quickly. The methodological tools that some social historians of the time were eager to employ included quantitative approaches, the idea being that this would better enable social historians to identify and characterize the social processes, structures, movements, etc. with which their scholarship was concerned. This enthusiasm faded with the rise of the “cultural turn” in humanistic disciplines and the growth of cultural history.

alanba42

Yeah, for what “social history with numbers” is see Linnaeus below. I would say that the book is a good example of what you get after a new method has washed over the field. He uses some statistical stuff, but not much. It’s just part of the toolkit now, just like now people will cite and use Foucault, but seeing the F-word in the introduction does not mean that it will be Foucault all the way down, like it was in the 80s-90s. Esherick does a couple of regression analysis things, but mostly he is using oral history and textual sources to explain how a variety of secret societies melded together to create the Boxers, who were rather different from other groups, but clearly grew out of the Chinese sectarian tradition. It is also a pretty chronological book, in that he is trying to explain how a series of events came together to create a perfect storm of drought, foreign obnoxiousness, martial arts groups and religion to create the Boxer Uprising we know and love. It can get pretty dense, and I can see how some people would not like it, but I found it both useful and fun to read (not always the same thing, obviously.)

@Warren T.
My guess is that the book on the Boxer Rebellion you bought won not the Fairchild prize but the Fairbank prize, named for the late John King Fairbank, one of the best-known American historians of modern China and who did much to establish Chinese history as an academic field in the U.S.

Warren Terra

I’m sure this is right (see also alanba’s comment above). Note alanba really likes the book, which I just want to repeat as a counterpoint to my not finding it a good read, in the interest of fairness.

Crusty

Numbers and statistics aren’t math.

Warren Terra

They’re for damn sure “measurement” though.

Lee Rudolph

Yes indeed. And when serious mathematical attention is paid to measurement (e.g., as by Krantz, Luce, Suppes and Tversky [of Kahnemann & Tversky]), those who like to measure without worrying about such niceties often bail out, to their (or more often their clients, or their subjects, or us generally) detriment.

[Which is not to say that I particularly recommend Krantz et al.; in the fullness of time, I hope to publish a detailed diagnosis of what’s wrong with the present practice(s) of measurement in the social sciences, and how it could and should be set right. But it’s slow going and life, not to mention commenting on blogs, keeps intruding.]

Philip

It ain’t just social sciences. Get a really numerically or empirically minded researcher in any field that touches computer science or engineering, and you find out it’s a goddamn mess. Even the academic literature about really basic hardware performance questions is often seriously shoddy.* And God forbid you trust anything purporting to measure effectiveness of different programming methodologies.

*caveat, this was a hobby horse for my advisor, so I heard a lot about it. But I read some of the papers and I have to say, I don’t disagree with him.

If you don’t mind me asking , and no need to reply, but what would the bare bones of this critique look like ?

sparks

Math models human behavior accurately enough to base policy on? Economics certainly tries to, very often with suboptimal (I’m putting it mildly) results. In poker, unless you’re extraordinarily naive or plain stupid you know the odds before you sit down, but there is bluffing and tells and other aspects of human behavior mathematical models cannot give accurate enough answers for a bettor to know when to raise or fold.

IOW, I ain’t buying it.

Captain Oblivious

Actually, the math does tell you* whether to call or fold to a suspected bluff, when you have a good hand but not a clear winner.

(*In the absence of a reliable tell, and most tells are not reliable).

Dilan Esper

In the variant of poker I play (limit hold ’em), math can basically “solve” a heads up game, such that you can never lose no matter how good your opponent is. That is called game theory optimality and is heavily studied by the best players.

But even if you have no interest in playing GTO poker (and you really shouldn’t, as you can make more money seeking out weaker opponents and exploiting them), proper exploitative play also requires math, including:

1. Calculating the amount of equity you have in the pot against a particular range of hands, which is the key to knowing when to raise, call, or fold.

2. Determining whether an aggressive or a passive play will make you more money against a particular player’s tendencies.

3. Determining your pre-flop range, including your 3-betting or isolation raise range against particular players’ ranges when you are trying to get hands heads up.

4. Not only optimal bluff catching, but also optimal bluffing percentages. Against a good player, you should mathematically “balance” your range so that the player cannot exploit you and should be indifferent between calling and folding. Against a bad player, you should bluff anything that has sufficient fold equity as compared to the size of the pot. All of those are math calculations.

Note, as well, that these involve your reads of other players. In other words, you can be the world’s greatest psychologist, and if you don’t understand the math, you cannot make the maximum profit on your reads.

And in truth, if you are great at the math, you don’t even have to be very good at the psychology. Simply making mathematically defensible plays will beat all but the toughest games.

Dilan Esper

Also, I forgot to add the simplest poker math of all- whether you should chase obvious draws, which depends basically entirely on (1) the immediate odds the pot is offering you (pot odds) and (2) the possibility of collecting additional bets on the river if you hit (implied odds).

AdamPShort

“In other words, you can be the world’s greatest psychologist, and if you don’t understand the math, you cannot make the maximum profit on your reads.”

This isn’t EXACTLY what you’re talking about, but it took me a while to learn that while it’s very easy to tell when certain players THINK they’re bluffing, you have to be careful because he may not understand the game well enough to understand how strong his hand actually is. He could be value-betting a hand that could beat your calling hand, and be reacting as if he’s bluffing because he thinks he has nothing. Great to make a read, but a read is only one piece of information out of many you need to consider.

Dilan Esper

Correct. That’s a big one.

As I said, I play mostly limit. But I have dabbled in no limit, and one of my favorite no limit hands involved a situation where I had open raised T8 suited in a $300-$500 cash game with $5 blinds in middle position (a bit out of line, but the game was playing pretty tight). I got a single caller from the big blind.

The flop came QTT. He checks, and I bet 2/3 of the pot (which I am probably doing with 100 percent of my range on that flop and in that situation). He starts tanking, tanking, tanking, staring at me. Goes on for a minute.

Finally, he announces “you look SUPER confident” and folds JT face up. On the flop. For a standard continuation bet.

I’m sure I DID look super confident, of course. :)

AdamPShort

My favorite way to uncover a bluff by a weak player is to pick my cards up and make a move like I’m going to fold. It’s very hard not to react in that situation. I did that once in a hand where there were only two callers and the flop had obviously missed both of us and I had an ace, and he had made a very suspicious-looking bet that screamed “I have nothing.” I did my little bluff-spotting move and he completely froze like a deer in headlights when I didn’t toss them in. He was so crestfallen I KNEW he had nothing. But he didn’t have nothing. He had a better ace.

Dilan Esper

Be careful about that in some casino cardrooms.

The rulebook rule in California is that if you make a motion that induces action, the floor can rule the action binding. So, for instance, moving chips forward to get a read than pulling them back, or making a fake fold, can be ruled binding.

AdamPShort

I’ve never had a problem with it. It’s not a fake fold, it’s just picking up your cards. It’s sort of like the balk rule. You can pick up your cards like you plan to fold, but you can’t make a motion toward the muck.

You get a decent amount of leeway with stalling when you’re facing a big wager on the end, also, as long as you don’t make people wait in run-of-the-mill situations.

People do expect you to reveal your cards really quickly after the hand, though, which sometimes does get me in trouble because I have trouble keeping track of who is supposed to show first. I had a woman accuse me of slowrolling her last time I was at Treasure Island and I felt really bad.

Dilan Esper

You can do worse on a guideline on slowrolling than the rule that is written in most California cardroom rulebooks, which has 2 parts:

1. The order of showdown is the last aggressor on the last street, or, if there is no action on the last street, the order of betting on that street.

2. Players who believe they have a probable winner should not follow the order of showdown and are encouraged to table their hands immediately.

Remember speeding up the showdown helps a good player’s winrate. You should know the range of hands you beat anyway and should not need to see others’ hands, and at the same time a faster game means more hands per hour.

AdamPShort

Ah, that’s interesting. Thanks!

That makes a lot of sense because in the situation I am describing this player had made a big bet on fourth street with three diamonds showing that committed most of her stack, so I thought a while and then put her the rest of the way in, but then somebody overcalled so the hand continued.

I was confused by all the action (I had flopped a set of aces) and incorrectly checked to the other guy on the end and then he also checked.

So it was definitely my turn to show, even according to rule 1, but I also should have known that three aces was probably the best hand. So basically, she was right and I was a dick. Oh well.

Nobdy

Math is fine in poker because all the variables being measured are well defined. The number of each card in the deck, the chances of given hands showing up in certain situations, the ante, maximum bet size etc… It’s all math.

But economics isn’t used just in those hypermathematical situations. It’s used to make predictions and policies about real human behavior. Human behavior is hard to reduce to math.

So you get models that start with “Assume perfect information…” and those models are used for real world predictions and policies.

Applied aeronautics models don’t start with “assume no gravity.” Or at least gravity is factored in before you actually build an airplane according to the model.

ThrottleJockey

Those “models” are meant to give you a starting point for discussion. They’re not meant to be the end point of discussion. And the reason for stating the assumption is so you can go back and re-visit–explicitly–how things change when you relax the assumption. In fact imperfect information and “agency theory” is something that economics spends a lot of time researching. But if all you ever do is study Econ 101 you’ll never get to that stuff.

Joshua

Well that’s the thing – it seems like everyone is stuck on Econ 101. Including the economists. Yes, they know better. They’ve done the work. But I think they also like the simplicity of Econ 101, the way you can distill everyone into simple formulae and graphics.

If you’ve gone to college, you’ve taken an Econ 101 class. For most of us, that’s all the economics we took. Economists, when they turn political, go right to those Econ 101 arguments and they get distilled in the popular discourse.

xq

I wish this were actually true. Econ 101 insights on market power would suggest far more regulation on anti-competitive corporate actors. If Econ 101 models of externalities were distilled in the popular discourse we’d have a carbon tax by now, among other things. And even the bare-bones Keynesian taught in Econ 101 is much superior to how most governments in the world actually acted during the recent recession. And if people really internalized the concept of declining marginal value, they’d be more supportive of redistribution! Econ 101 is simplistic, but it gets most things mostly right (and is mostly consistent with progressive ideology); in general it does a lot better than the political process.

Pseudonym

The problem with much of economics is that it’s doing math when it should be doing science.

ThrottleJockey

How do you distinguish the two?

Philip

Empirical measurement vs constricting highly theoretical models without real experimental verification. It’s a cousin to the criticism of certain fields in theoretical physics, that they have done tons of fantastically complicated math but not really shown that it describes the real world.

AdamPShort

Not to speak for Sudo here, but I think what he means is that it’s much more important to observe what is happening (science) than it is to create this big mathematical contraption that’s designed to simulate what you think is supposed to be happening (math.)

In economics it often seems that a flawed model is created, data is gathered that reveals the model to be flawed, and then the model is adjusted slightly to account for the data. Then more data is collected and the model is adjusted again… This isn’t how science is supposed to work. If your hypothesis is not supported by the data, you’re supposed to discard it and come up with a new one.

xq

n economics it often seems that a flawed model is created, data is gathered that reveals the model to be flawed, and then the model is adjusted slightly to account for the data. Then more data is collected and the model is adjusted again… This isn’t how science is supposed to work.

This is exactly how science is supposed to (and does) work. You’re making a distinction between “adjusting” and “discarding” models that doesn’t actually exist.

AdamPShort

Well, maybe I’m classifying the problem incorrectly. But the problem in economics is you start with an assumption about the way, say, Quantitative Easing should affect the economy that is just wrong. Mechanistically, it’s false.

And QE happens and it doesn’t produce the results you expect, but instead of asking the question of whether you’ve misunderstood the mechanism entirely you say “well, this happened, and it didn’t produce the results we expect, but these conditions were present, so that must be why it didn’t work the way we expected.” So then the next time QE is tried is also doesn’t work as expected and so now you have to add some new conditions to the list of conditions that prevent this imaginary mechanism that is never going to operate from operating.

It’s viewing the model as sacrosanct just because your view of how the system works says it must operate.

xq

I think that’s a reasonable critique, though I don’t know that the problem is worse in economics than other fields.

But keep in mind that sometimes your initial view of the world is correct and the data is misleading. And it’s possible to weigh the data too heavily relative to everything else you know about the world. Otherwise, you’re left believing in ESP, which the majority of the published data on the topic supports. There are no easy answers here. Science is hard.

AdamPShort

That is true. I think one thing that’s frustrating though about economics is that often we are talking at root about systems that are notional, and you’re trying to measure the impact of the notional system on the real world.

Yet it seems at times economists are unwilling to look at the mechanisms of the underlying system and actually understand what’s happening. There is a preference for the abstract model over an examination of something that can be looked at and understood comprehensively on its own terms.

The analogous case would be a biologist who had a model of gorilla society that included the assumption that gorillas can run seventy miles per hour, and another biologist comes along and says “I’ve studied gorillas extensively and I am very sure that gorillas can’t run nearly that fast.” But the biologist is so concerned about studying gorilla society, rather than studying the biology of gorillas, that he can’t really grasp the critique.

I am sure this happens in other disciplines (it happens in psychology for sure) but it seems to be absolutely endemic in economics.

AdamPShort

To be a little less abstract myself, for an example go and read some Fed papers on how QE works, what its various channels of impact are, etc. and then read economics commentary about QE’s role and just notice how the models of QE’s effects are being explained and justified based on a completely incorrect understanding of what QE is and how it actually operates.

Now I the closer you get to economists who are really studying the effect of QE in a technical context, the more they probably actually understand the mechanism and the more their research is actually useful. The problem is as it gets translated out toward the people who actually get to make recommendations about policy, the more it gets put into terms that tend to support the view policymakers already have of how the system works, instead of pointing out the fundamental flaws in that view.

Now obviously I love economics and am a huge fanboy of various economists so I’m not really offering it as a critique of the discipline itself. Just saying I, too, am annoyed by many things about economics-as-practiced.

Captain Haddock

Like most kinks, math doesn’t need to be a fetish to be fun and useful in moderation.

Captain Oblivious

This.

The problem isn’t math. Math is simply a tool. The problem is the way it’s used.

Dilan Esper

Sure, but trying to do economics WITHOUT math is basically a recipe for bias and inaccuracy.

ThrottleJockey

Yes, its called ideology.

CD

Nope. There’s no “math” in Adam Smith, though there are certainly points you can mathematize if you want. Hayek (maybe not the best example to use here but what the hell) avoided math. Plus you can do all kinds of bias and inaccuracy with math. Captain O is right. These are tools.

Thom

LIke a gun?

Scott Lemieux

Statistics, as Ralph Kiner said, are like bikinis. They show you a lot, but they don’t show you everything.

The thing is, everybody understands this.

Dilan Esper

I think a lot of people do not. I’ve heard many, many statistics be presented as argument-enders in my life.

Pseudonym

At the same time, I totally understand why people “fetishize” mathematics, and experts generally SHOULD fetishize them.

No. Just no. Experts should treat mathematics as a tool, but not a fetish. We already have a field of study dedicated to exploring mathematics. You may even have heard of it. It’s called mathematics. We shouldn’t be basing our economy on people who call themselves economists but are really just toying with math to pleasure themselves and impress their friends and colleagues.

Ronan

To what extent does a layman’s knowledge of maths really help you in poker ? I understand at the top end when you have genuine maths geniuses and bands of quants it has been proven to be effective (I’m not 100% sure by what specific mechanisms). But for the average maths Joe (which I’d assume you are) how does it help beyond being a very general mode of thinking or heuristic ?

Nobdy

Economists tend to be the kind of people who use their model to make a prediction and when that prediction turns out to be false, sometimes spectacularly so, they say “Oh well, reality failed to live up to my model.”

They lack humility and are constantly convinced that with this or that tweak the model will spit out accurate and useful predictions, but this is never the case.

They also love numbers regardless of how useful they are because they are easy to work with. GDP is a principle example.

If you look at what GDP is you go “Wait, why do we care about this?” And we shouldn’t except in a sort of abstract broad sense but not in the “OMG it went down by 0.2% everyone panic” sense. But it’s easy(ish) to measure so it becomes THE ONLY THING THAT MATTERS because economists don’t know how to measure other, more important things.

The methodology drives the policy goal, which is insane if you actually think about it.

MacK

I remember a course in Law and Economics, an “econometric” one with some 30 students – 3 of us had physics/math backgrounds. The professor hated us because everything he tried to demonstrate started with some assumed value or mathematical relationship and we would, puzzled, zero in on the assumption and ask him “but, but where does that come from….”

“it’s reasonable to assume it”

“But why – is it right?”

This would get worse as a little math showed that the assumptions determined the outcome and could radically change it. It got contentious (we were 3L.) He hated the three of us – but seriously we were asking serious questions, our previous education having been very much against this type of assumption.

It was a take home exam – I put more effort into disguising my writing and syntax than into the answers and swung an A+

Ken

Ah, fond memories. Or at least memories. We must have similar backgrounds.

Did you also have days where the econ professor would say, “Now this will require some fairly complicated math” and write on the board – well, something like screencap at the top of the article. (What’s that from, anyway?) Those of us from the engineering school would look at one another, smirk, and solve the equations while he was still explaining the notation to the MBAs that made up the bulk of the class.

rjayp

Damn. I was going to buy Out of Sight but now I’ll have to buy The Great Exception first.

Thus maximizing my utility subject to a significant income constraint. And the first derivative told me to do it. I have no choice in the matter.ceteris paribus

Captain Oblivious

Comment of the day.

slothrop

You can make the claim that marginal utility theory is bunk. But, there are many economists who challenge economic orthodoxy –Steve Keen Comes to mind. There are many other economists who work in the tradition of Kalecki & Minsky & O’Connor, etc., etc..

In any case, it’s interesting that Dr. Loomis writes “stories” about labor history, but doesn’t have any contact (by his own admission) with the rich leftist history of economic thought, thus working with one eye closed.

jeer9

Yves Smith made a fairly thorough argument along the same lines in ECONned, criticizing the faux empirical approaches used by economists and the masking of complex social phenomenon in simple mathematical equations. Her savaging of the “self-correcting” free marketeers seemed point-on, though I know she’s not much respected around these parts for her political opinions and the company she keeps.

liberalrob

Wouldn’t it be ironic if, thanks to the increasing role of automation in all aspects of our lives, economic theories actually became more accurate? I mean, a computer program is the epitome of a “rational actor.”

Lee Rudolph

I mean, a computer program is the epitome of a “rational actor.”

No. It’s the epitome of a logical actor. Logicality and rationality are quite distinct.

Philip

As anyone who has to program or use them heavily day-to-day can attest to.

Ken

Worse, if anything. Programmed trading is quite capable of thoroughly crashing a stock market before the monkeys can notice what’s happening and apply a little rationality to stabilize things.

James B. Shearer

I think this is a good point. An increasing fraction of economic decisions are not being made (directly) by humans. And this may well change how the overall system behaves.

MacK

My earliest lesson about economists.

In the late 80s I was doing some non-economic consulting for the IMF and World Bank. The IMF in the main lobby had a pretty good cafeteria/dining room. One day I was working with a fairly senior (as I saw it) employee, a manager with pretty big responsibilities. Things ran on and I said we should get lunch and continue over lunch – heading for the cafeteria, when he announced he was not allowed to eat there…..

Why I asked.

Well it turned out the dining room was reserved for particular classes of employees (somehow as a consultant, very junior I made it) but not for “staff.” The economists of course all got into that cafeteria – and as it turned out could use the front door – the staff had a servants’ entrance around the corner. I was genuinely astonished … and this situation was still in place in the 90s.

Another factoid – it was not unusual for older international employment contracts to specify 2 trips home for employees and family a year. IMF contracts not only had First Class for the economists, but those who had been there long enough had “by sea or air” clauses – and yes, several in the 80s and 90s used to take Cunard, none declined first for even business.

jim, some guy in iowa

that story is as classic Galbraith as it is classic LBJ. I’d highly recommend JKG’s memoirs to any one interested in liberal politics from the New Deal through the 70s

Thanks. Skidelsky has misremembered the wording, and also the whole target of the anecdote.

jim, some guy in iowa

Galbraith liked both Kennedy and Johnson. I think he might have been the one person who served them both who did

mds

that story is as classic Galbraith as it is classic LBJ.

And the irony of it being used by Cowie is that Galbraith was an economist who was (1) quite concerned with the real-world consequences of economic policy, and (2) derided by some of his colleagues for being insufficiently mathematical.

jim, some guy in iowa

yes. as Herr doktor says below, Galbraith has been dishonestly used to make a point about the other kind of economists

Let me tell a shooting a fish in a barrel anecdote: I was recently asked to review a paper by an economist for a right-wing think tank’s journal. (I was asked because the paper’s thesis concerned building technology in the nineteenth century.) I stopped counting begging-the-question assumptions when I reached an even dozen, on the third page of the article.

#notalleconomists, but damn.

Hogan

This one’s for you:

I contemplated the sign over the bar which read, “Only
genuine pre-war British and American whiskeys served here.”
I was counting the lies that could be found in that one
sentence, and had reached four, with promise of more…

Jason

Hmm, did they say which war? I know I only drink pre-Operation Enduring Freedom Whiskeys.

Obviously we need people studying the economic system. But as currently constructed, the field causes more problems than it solves and in doing so, directly contributes to the inequality of the modern world. Economists need to do better. Stopping the fetishization of mathematics is a good place to start. Study real people doing real things. Read the work of people in other disciplines. Come off the mountaintop and understand the people you theorize about. Talk to them. Speak to their concerns.

I forget precisely where I heard this, but at some point in my PoliSci undergrad education I was told (or read) that the Social Sciences as a rule had a massive inferiority complex due to the intractable problem of reconciling the “Social” part of their moniker with the “Science” part. “Science” demands reproducible, falsifiable, empirical results which are simply not in the nature of the study of human social interactions to provide. The best you can hope for are approximations using surveys with large enough sample sizes to be statistically plausible; and that’s just not as compellingly “rigorous” as the empirical results of Physics or Chemistry, where things either happen or they don’t (quantum mechanics aside).

So I think it’s natural (human!) for those who pursue Social Sciences as a career to try to burnish their credentials as “scientists” by emphasizing as much as possible those aspects of their research that do fall more closely in line with the traditional conception of “science;” and in general, that’s done via mathematics.

But the Principal Investigators refuse to publish in the peer-reviewed literature!

(I am reminded in a roundabout way of Zhores Medvedev’s Soviet Science, and how he describes discovering some of the horrors of radioactive contamination happening in iirc the Urals, because some scientists had written up their observations of the effects in the scientific literature as if they had been planned experiments)

I’m still waiting for someone to tell me how cultural anthropology is a science.

wjts

Most, but not all, of the cultural anthropologists I know agree that it is not. (Well, OK, they say it’s a social science, but most of the historians I’ve known have claimed to be social sciences, too. When I was a history major, we were in the Division of Social Sciences, and we liked it that way.)

I know historians split on this issue. I can kind of go either way. I do policy history to some extent so I don’t feel totally comfortable in the humanities. But there’s certainly nothing scientific about my work. Mostly, I don’t care.

I did some undergraduate ethnographic work on how cultural identity survived in diasporic communities and how various people in an organization conceived of the goals and struggles they faced. In both cases, after interviewing a number of people about what ________ (being Welsh, working in a history museum, etc.) meant to them, we picked out things people said and then went back and asked them to rank the importance of those traits. Then we looked at the results to see how much agreement/disagreement there was. So you could have a small museum where the staff and volunteers both had similar ideas of what the mission was, but very different views of what challenges the organization faced.

I would be comfortable with calling this sort of research social science, but wouldn’t get upset with anyone who insisted that it wasn’t science. It is a little distressing to know that I could have just made up all the data and been protected by much of the field instead of dragging myself all over rural Vermont asking people what being Welsh meant to them.

Lost Left Coaster

I am a cultural anthropologist. I say, emphatically, that is is NOT a science.

Thom

Or we could change our idea of what sciences do. But given our (misleading) idea about sciences, the social “science” label is very misleading. As some, especially anthropologists, will be happy to concede.

Lurker

The word “science” is probably the problem. The German Wissenschaft is a term that covers sciences and letters. Thus, an English philologist is a Sprachwissenschaftler in German, a term that you could translate as “linguistic scholar” or as “linguistic scientist”.

This ambiguity is really a boon, because it means that you don’t need to make so much difference between science and letters. Even theology is a Wissenschaft.

The problem with economists is not that they they have created “a field specializing in mathematical formulas that tell us almost nothing about human behavior…that is only comfortable with policymaking from 30,000 feet”.

The problem is that, even given the over-simplified, over-abstracted consensus assumptions of their discipline, they are using the wrong maths, and they are using the wrong maths in the wrong way.

One of the symptoms of which is that their 30,000-foot policymaking has nearly no predictive power whatsoever. Even by the internal logic of the discipline, it has failed as a discipline.

Modern economics has been a political project from the outset, and the maths has merely served as a convenient smokescreen to confound the rubes.

Just to elaborate a bit, if you allow for an experience curve (aka Henderson’s Law) wherein the log of the unit cost decreases proportionally to the log of units produced, and if you allow that the means of production (i.e. capital equipment) is itself a product traded in a market according to supply and demand (and is subject to an experience curve), and if you allow that capital finance is a product traded in a market according to supply and demand, and if you allow that the yields of primary production (agriculture, mining) are subject to unpredictable fluctuations due to inherently exogenous factors, and if you allow that primary producers participate in the market for capital finance, it is not possible to combine these few simple, mathematically tractable, and uncontroversial assumptions to an equilibrium model.

Anna in PDX

I have a very limited background in Econ, but it seems that much of the message in the linked article was covered in the Ha-Joon Chang book written in 2010, “23 Things They Don’t Tell You About Capitalism.”

Brett

This is not true of all economists of course, but it is true of far too many.

It’s not even true about most economists, or economics. You don’t hear about the majority of economics research because it’s stuff like “auction theory” (which works extremely well, as economist Noah Smith has pointed out on his blog) and other empirical micro-economics experiments – Justin Fox had a piece on this.

That stuff doesn’t get nearly as much attention as the shaky macroeconomic stuff that you usually hear about, but you could say the same thing about history. How much does most historical research get in terms of attention compared to biographies like John Adams or irritating “Grand Theory of History” books? And of course, every field has its hacks – hell, even the “hardest” science fields have their hacks.

As that survey of economic training shows, economics demonstrates more internal control over its own labor market, hiring only those who follow the prescribed formulas. The study of economics appears to be an exercise in the affirmation of orthodoxy.

That must be news to the feuding members of the “Saltwater” and “Freshwater” schools of economic thought.

And as Krugman notes, a lot of the more popular right-wing economists are ignoring their own research in order to promote their preferred policies.

xq

I wish critics of economics would engage more with the empirical stuff, especially in areas that are traditionally covered by other social sciences where you really can make direct comparisons between fields. In my view, economics does very well in this light, mostly (I think) because econ grad programs do a better job teaching regression and its potential pitfalls than other social science programs (or biosciences for that matter).

Peterr

Dale Mortensen was one of my econ professors in college, and his work in labor economics was profoundly grounded in the real world. He was awarded the Nobel Prize in 2010 in large part because of this, as his work (and that of his co-winners) forced the discipline of labor econ and several other related disciplines to be more realistic about their assumptions.

From Dale, I learned the importance of being as explicit as possible about my assumptions, and the limits that assumptions put on any conclusions that can be drawn from a given model. In his research, much of it was devoted to tearing down the assumption in many models of perfect information in the labor market and the perfect allocation of labor in production, as the very existence of unemployment (and especially longer-term unemployment) indicates that SOMETHING is making matches between job seekers and employers more difficult. The label for this “something” is friction in the search and matching process, which he explained by way of example in his Nobel lecture:

Perhaps the best way to answer the “what” question is by example. Two years ago my wife and I decided that it was time to move from our home of 35 years to a more comfortable and convenient condo. The apartment had to be relatively large and on one floor, with a view of Lake Michigan. With these features in mind, we consulted several agents to generate a list of possibilities. We then spent considerable time searching for the right one, at least one which could meet our needs and fit our budget. Finally, a year ago we bought the apartment, which has since been remodeled. So, now we need to sell the house. How do we find a buyer willing to pay the price we are asking? All of the time and effort spent by both sides of such a transaction represents search and matching frictions.

Economics is a strange science. Our subject deals with some of the most important as well as mundane issues that impinge on the human condition. Our own study of how the labor market works and the role of unemployment in it provides the perfect example.

Studs Terkel, a fellow Chicagoan, was noted as an American oral historian as well as a famous character about town. In his book entitled Working: People Talk About What They Do All Day and How They Feel About What They Do, he sums up his interviews with the following observation: “For these people … work was a search, sometimes successful, sometimes not, ‘for daily meaning as well as daily bread’…” Although labor income is by far the largest component of gross national product, a job is not just a commodity. For many, work is an important reason for living. Even for those who are less fortunate in their allocation of work, being unemployed is a miserable state. These facts add to the reasons for supporting the income of the unemployed during this recession and restoring prosperity as soon as possible.

Over and over again, Dale taught me and my classmates that behind all the math and all the models are real people, with real lives. The models are approximations — useful ones, we hope — but approximations nonetheless. Those who blindly worship their models (whether economists or non-economists) do violence to the field of economics, and even more violence to the people whose real lives and real economic choices economists are trying to understand.

After getting my degree in econ, I went on to become a pastor rather than a banker for a whole host of reasons, one of which is the stuff that this post condemns. But to issue a blanket condemnation of the entire discipline based on the work of its loudest and worst proponents (and their cheerleaders in the political world) is academic stereotyping of the worst sort.

Funkhauser

I agree with this.

My main interactions have been with labor/development economists who are using the tools they have – and borrowing tools developed in other disciplines – to solve pressing social issues. Esther Duflo came immediately to mind. I’m glad she and her cohort do the work they do.

As a blanket characterization, this post is lazy.

pianomover

Sooooo now we’ve been told what the problem with economics is what other fields of study could we examine for its heightened sense of self importance and outsized influence on society?

SqueakyRat

There really aren’t that many. I think economics is pretty close to unique in that way. It’s about human society (and therefore politically relevant) and yet lends itself to almost unlimited mathematical technicality. Unbeatable combination!

apogean

I like that the banner pic is of a guy teaching algebra. What a lackey of capitalism!

Here’s a point that should probably be made: “if reality doesn’t agree with your theory, so much the worse for reality” isn’t a move that’s limited to economics. Respectable “real scientists” like physicists do it all the time. This is because there is a significant weight of evidence behind a theory that has been investigated a lot, and a single piece of evidence doesn’t make you throw out twenty years of work. Any reasonable methodologist will ask a number of questions:

-did I make good measurements?
-if so, can I account for this phenomenon within the existing theory?
-if not, can I restrict the domain of the theory so that it’s a good approximation within its domain, even if it doesn’t correctly describe all of reality?

A great example of this is a few years ago, when CERN announced that they had measured a neutrino going 105% the speed of light. Their actual press release said “we know this is almost certainly not right, please help us look over the results” while the media reported “WAS EINSTEIN WRONG!>?!?!!!?111?” The reasonable response in this case is to work very hard to find a simple explanation that doesn’t require you to throw out your entire theory.

I am fairly pro-economics as a discipline, though I think it’s in dire need of absorbing behavioral economics and becoming more of a traditional social science than the “social physics” discipline it sometimes sees itself as. We can reconcile the apparent distance between social science and physics, not by saying that social sciences aspire to physics-like objectivity in spite of sometimes falling short of this goal, but that physics isn’t quite what we thought it was; it’s a messy, but still meaningfully rigorous, process.

postmodulator

Your example isn’t an example of what you think it’s an example of.

apogean

How so?

postmodulator

I don’t read that as physicists saying “so much the worse for reality.” Physicists are pretty used to seeing one anomalous result and not necessarily thinking that they need to discard everything they believe.

apogean

Of course they’re used to it. I’m not saying it’s problematic for physics at all. But on a naive Popperian view, someone might be inclined to say that something that is confirmed a thousand times needs to be disconfirmed once to be proven false. Undergraduate science textbooks often say things like this. But of course it’s not true, and no on acts at all like it is.

And I’m trying to claim it’s the same sort of thing that economists do when they make broad claims about economic laws while ignoring the counterexamples. I still think it can be useful to say things like “increasing the money supply does not lead to inflation when there are substantial numbers of unemployed workers.” This is not true in all cases, as we learned in the 1980’s, but it seems to be true in some domain-restricted set of circumstances, or at least it’s a lot more likely than its opposite when the preconditions are true.

“Ah Ken,” he said, “just what I want to say. I’m not going to change a word. It’s just a wonderful speech.”

Then his expression changed and he said, “But nobody else will think so. Did it ever occur to you that making a speech on economics is just like pissing down your leg? It seems hot to you, but not to anybody else?”

Here’s Skidelsky’s misremembered version that Cowie copies:

After reading through a policy speech prepared by John Kenneth Galbraith, President Lyndon Johnson addressed the economist. “You know, Ken,” he said, “the trouble with economics is it’s like peeing in your pants. It feels hot to you but leaves everyone else cold.”

It concerns me that Johnson’s skepticism about economics speeches has been twisted into skepticism about economics.

yet_another_lawyer

Great catch.

jim, some guy in iowa

yes. there’s something kind of willfully reductive about the idea economics is basically illegitimate. It’s an important part of a bigger picture, I think

If Cowie wants to question the legitimacy of economics, that’s no skin off my nose. It does annoy me, though, that Skidelsky distorts Galbraith’s anecdote almost out of recognition to fit his narrative; then Cowie encounters the distorted version while reading Skidelsky in search of cherries to pick, and repeats it without bothering to check the original (and without attribution); then Erik repeats it from Cowie, again without bothering to find the original.

Should we conclude that history is basically illegitimate, a field where no-one bothers to verify their sources?

People like to depict disagreements in economics between those that believe in free market capitalism and those that believe in socialism. That isn’t the real divide. The real divide in economics is between those that see market forces as something akin to natural forces and any attempt to mess with them will cause grave and irreparable harm or those that see the economy as a social construct that can be modified in a variety of ways without many problems. You have people on the right and left in both schools but the former tilts towards the right and the latter to the left.

apogean

Setting aside the question of consequences I would say it’s more a distinction between people who think economic laws are innate vs. think they are contingent results of historical circumstances.

CP

People like to depict disagreements in economics between those that believe in free market capitalism and those that believe in socialism.

This is one of the more harmful notions about economics in the popular imagination, I think, and unfortunately one of the more common ones.

There are several reasons I went from conservative to liberal towards the end of high school, but one of the big ones was simply taking enough high school economics to realize that it isn’t a binary spectrum between Capitalism and Socialism, with Capitalism defined in post-Thatcher/Reagan terms as “no government activity outside of the police, military and courts.” (So that’s actually two misconceptions, 1) that it’s Capitalism v. Socialism and 2) that capitalism can only mean a certain thing).

Second, as Cowie points out, the Nobel in economics is a ridiculous joke that only exists because the Bank of Sweden wanted to promote itself.

I don’t get this. Aren’t the regular Nobel prizes similarly a joke that only exist because Nobel felt guilty or wanted to to fluff his legacy? Is there something particularly bad on the way it’s administered?

Prizes are always to some degree silly things that are over-read and over-valued. Doesn’t mean that, done right they provide some useful guidence or support to good people.

CD

Yep. It’s one of those complaints favored by comment-section loons.

marduk

Seems like this is more an empiricism vs theory critique than a mathematics vs sociology critique.

AMK

Who employs economists as economists? (capital E-Economists with advanced degrees in the field, not pre-MBA undergrads). The white-shoe financial sector, plus elite universities that feed its pipeline (and non-elite schools aping the elite schools), plus think tanks that front its interests (plus government, when the “thinkers” are plucked out of the tanks and given appointments). Who has benefited most from the 30+ year antitax jihad that these economists just happen to promote?

Part of the problem also is that for too long, the forces fighting free-market ISIS are fighting the wrong way, trying to counter fake economic “facts” with emotional appeals instead of real facts. The article on LGM the other day about the economist PhD extolling the virtues of child labor at sub-minimum wages for “economic growth” was met with postings about how this guy must be some kind of sociopath. He probably is…but calling him names is not as effective as citing studies that show how forcing 12-year olds to work in fast food makes them so sick and stupid that the costs outweigh any projected “growth” or productivity gains.

Ruviana

Can I just note that any college with an economics curriculum employs economists, whether elite or otherwise? Someone has to teach those pre-MBA undergrad econ majors.

sharculese

Why did this post have to be headlined with what appears to be a teenager doing what appears to be algebra?

It originally was a photo of Krugman beating a dead horse, but the new content filter/trigger warning WordPress filter Farley installed replaced it with something benign.

No Longer Middle Aged Man

Is that a Matt Yglesias guest post? Because it’s gold standard MY in its simplistic caricature of economics and conflation of political opinions and hackery with actual economic research.

Over-reliance on theorizing based on unreal assumptions? Perhaps. Mathematical heavy rigorosity to disguise vapidity? Sometimes. Conceit. Most definitely. None of these as pathetic as Cowie’s spolit child stamping its feet when the other children want to ride bikes when he says they should go swimming.

SqueakyRat

Funny LBJ story, but sad to find Galbraith on the short end of it. If anyone stood up for a humanistic and broad-minded approach to economics, it was Ken Galbraith.

Luckily the actual story (as told by Galbraith) is much less insulting to him, as Herr Doktor relates above.

Dennis Orphen

Studying LBJ is like pissing your pants in a dark suit. You get a warm feeling all over but nobody notices. Now if you will excuse me, I’m going to hike up my Hagar slacks, plant a Stetson Open Road on my head, and go get myself a Fresca.

When you can apply SABR principles to buying a cup of coffee, then we’ll see a bloom in economic theory.

Ronan

Related to this thread, but also some other threads that are up, I’ve a question for any epidemiologist, or statistician (or anyone really) about police killings in the US. Afaicr white Americans make up the largest demographic killed by police, but African Americans are disproportionately more likely to be. However, African Americans are also disproportionately more likely to be poor than whites. If you looked at it through income rather than race, would that be a better way of estimating the risk of suffering police violence? Or are African Americans still more likely to be affected by police violence than poor whites?

The data collected for police shootings is pretty limited, and I believe the only categories measured are sex, race, age, and claimed circumstances of the shooting. If you split it by city you might be able to extrapolate SES from sex+race+age+city, but I don’t think you’d end up with any valid conclusions.

Jeez, this whole post is about 20 years too late in kicking what is now a thoroughly dead horse.

Theory driven research in all the social sciences – not just economics – is being quickly chased off center stage by empirical work. The work also involves some pretty complicated math because … well, that’s what empirical research is based on in all the sciences. What’s changed recently – and what some of the older people in econ and other social sci disciplines don’t like – is that the amounts of data available for doing research have increased so dramatically that it is now possible that a full range general findings on social affairs will be developed. As others here have pointed out, this is already happening.

The historians are a bit behind the curve since the data revolution isn’t going to help them with many of their problems; if the data wasn’t collected, it wasn’t collected. I get that this can be frustrating for folks like Erik when social scientists essentially blow them off. But … catch up, why don’t you?